Tesla's Elon Musk proves why patents are passé: Don Pittis

Tesla founder has given away patents on electric car technology

Elon Musk, chief executive of Tesla Motors and SpaceX, recently wrote that there's 'far too much effort and energy put into creating patents that do not end up fostering innovation.' (Stephen Lam/Reuters)

About The Author

Don PittisThe Business Unit

Don Pittis was a forest firefighter and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London. He is currently senior producer at CBC's business unit.

As if transforming the global automotive, energy and space industries wasn't enough, Elon Musk has become the latest hero of the open source movement. And like some kind of King Midas, he's made a killing doing it.

Last week, Musk gave away all the patents on Tesla's electric car technology, allowing anyone — including competitors — to use them.

Now, even tech giants such as Apple, Google and Samsung are taking notice, backing off on lawsuits and considering better ways to share the inventions they own.

Giving away your patents is not supposed to make you rich. In fact, according to conventional wisdom, it should be just the opposite.

The patent system serves many useful business purposes, says Vancouver intellectual property lawyer Craig Ash. "[Patents] encourage innovation. They give people incentive to come up with new and useful ideas."

But led by the fast-moving software sector, the idea that patents and copyrights encourage innovation has come under attack. Instead, there's a new paradigm.

The Linux model

Innovators such as Linus Torvalds, the inventor of the Linux operating system, have helped turn open source software into a business success story. Back in 1991, Torvalds became frustrated with restrictions on licensed software and decided he would create his own operating system kernel, leaving it open for others to manipulate and improve.

Open software saves money on paying licence fees, but Canadian open source enthusiast and consultant Glenn McKnight says that's not the main reason businesses like it. He compares it to preparing a meal yourself rather than eating prepackaged food.

"It's completely transparent, completely open to take out certain ingredients that don't agree with you," says McKnight. In the case of open-source products, "People get access to the original patents, tweaking it, modifying it, driving the price down, making it accessible."

Tesla has outperformed its rivals in the electric car market, earning rave reviews from Consumer Reports magazine and seeing its share price soar above $100 US this year. (Noah Berger/Reuters)

He says cost also comes into it. While working on a project in-house would give a company exclusive rights to the software it created, that business would have to pay for all the programming hours. On the other hand, contributing to an open source project that shares the clever ideas of many other programmers would expedite the process.

According to a blog post by Elon Musk announcing Tesla's new strategy, that's what he hopes to do by sharing his hardware patents for electric cars.

"We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly-evolving technology platform," wrote Musk.

But for Musk, it was not just about the advantages of sharing technology. After publishing the blog post, he warned that the patent system was becoming an impediment to innovation.

He said patent owners, sometimes called patent trolls, often create "landmines" on an innovator's road to success. Patent trolls buy up patents and deliberately seek out and threaten to sue other businesses that they believe might be infringing them.

"I think there is a general movement and a general recognition in the technology community that we need to reform the patent process. There's far too much effort and energy put into creating patents that do not end up fostering innovation," said Musk. "I think no reasonable person would say that the current patent system is ideally suited to foster innovation."

Patents 'stifle progress'

New research by Catherine Tucker at MIT's Sloan School of Business backs him up, showing that patent trolls really do kill businesses — especially startups — and damage the wider economy.

Patents "serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors," wrote Musk.

"When I realized that receiving a patent really just meant that you bought a lottery ticket to a lawsuit, I avoided them whenever possible."

Other giant corporations may be watching with interest. Apple and Google have declared a cease-fire in their mobile telephone patent wars. Apparently, Samsung wants to join the truce. Like Musk, these companies are discovering hugely expensive court battles are no guarantee of a generous settlement.

And to put the icing on the cake, Musk's generosity has already offered evidence that sharing patents may be a good idea. Nissan and BMW have told enquiring reporters that they would like to take Musk up on his offer, especially when it comes to Tesla's "Supercharger" method for fast battery recharges.

The market has delivered its own verdict on the idea of two auto giants working with Tesla on a "common, rapidly-evolving technology platform." This week, Tesla shares skyrocketed, hitting a new all-time high – making Elon Musk half a billion dollars richer.

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